John Ivison: Canada ready to sign EU trade deal, but Newfoundland may throw wrench in the plan

Canada ready to sign EU trade deal, but Newfoundland may throw wrench in the plan

It’s been said that the real father of confederation is deadlock. The negotiations over the free trade deal with the European Union offer plenty of fresh evidence that Canada’s own worst enemy is its unwieldy constitutional structure.

Ottawa is set to sign a free trade deal with the EU when Stephen Harper visits Europe for the G8 conference next month. But there are fears that Newfoundland and Labrador may walk away from any agreement that does not protect its fish processing industry.

Trade sources in Europe and Canada suggest the plan is to announce an agreement around the G8 meeting in Northern Ireland next month. Some outstanding issues such as government procurement and auto manufacturing remain and officials sounded a cautions note. “An agreement will only be finalized when Canada’s key interests are met. The reality is, the deal needs to benefit every region of the country,” said Adam Taylor, communications director for Trade Minister Ed Fast.

But the expectation is that the remaining sticking points are likely to deemed of a technical nature and kicked into the weeds to be resolved later.

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The most aggravating problem for the feds is Newfoundland and Labrador’s position on the issue of minimum processing requirements (MPRs) – the regulations that guarantee fish landed in the province must be processed there too.

The fish section of the agreement in principle offers Canadian provinces preferred access to the world’s largest seafood import market. Tariffs, currently ranging between 11-25%, would be cut to zero under the agreement. But sources suggest Newfoundland and Labrador is set to reject the agreement because it makes no provision for protectionist MPRs, regulations to protect jobs for local fishery plant workers that are illegal under World Trade Organization rules.

Premier Kathy Dunderdale told a business audience in St. John’s this week that Nigel Wright, the Prime Minister’s former chief of staff who is at the centre of the current expenses scandal, tried to persuade the province to drop its objections by linking the EU trade deal to a $1-billion federal loan guarantee for the Muskrat Falls hydroelectric project. Ms. Dunderdale said she slammed down the phone on Mr. Wright. “Poor Nigel Wright. His ear’s still ringing when I smacked the phone down,” she told the local board of trade.

Ottawa signed on to the loan guarantee, despite the Premier’s refusal to bend on the EU deal.

However, it is understood that the federal government has raised the prospect of finding some kind of fiscal punishment for the province if it doesn’t back the agreement.

The federal position is that minimum processing requirements will eventually face a challenge under WTO rules, so why not sign on for a deal that promises to create a bigger market for the province’s fishermen.

The feds have a point. Unlike the North American Free Trade Agreement, the provinces are integral to the EU deal, particularly when it comes to provincial procurement. Ottawa needs provincial approval to close the deal and it’s not immediately clear what a deal without Newfoundland and Labrador would look like.

Ms. Dunderdale clearly enjoyed sharing with the board of trade how she dealt with that city slicker, Nigel Wright. She may find it considerably less rib-tickling if, at some future date, she is forced to explain why the province’s fishermen are being undercut by competition from the other Atlantic provinces and U.S. east coast states, which are in the process of negotiating their own trade deal with Europe. Her office did not return calls seeking comment Thursday.

No one gets anything for nothing in these agreements. But the tradeoff here is of clear benefit to the province — a once in a lifetime chance to benefit from massive tariff reductions. The flip side is clinging to a processing industry that at some future date is going to have to stand on its own feet or die.

Are the politicians who rule the Rock really so parochial they can’t see the big picture?

In the wake of a Grammy Awards ceremony that disappointed many, from Kanye West to the masses on Twitter lamenting the state of pop music, a historical perspective is key. Few are better poised to offer one than Andy Kim.